Growth slows after Brexit vote and North Sea challenges.
The impact of the Brexit vote contributed to lower growth in Scotland in 2016 new figures on the nation’s GDP reveal.
Over 2016 as a whole, the Scottish economy grew by 0.4% despite the challenges posed by the slowdown in the oil and gas sector, but contracted by 0.2% in the fourth quarter of 2016 reflecting, in part, lower consumer confidence in Scotland as a result of the Brexit vote than in the UK as a whole.
Statistics announced by Scotland’s Chief Statistician show:
- GDP growth in 2016 was 0.4%
- The service sector expanded by 1.8% in 2016.
- The economy contracted by 0.2% during the fourth quarter of 2016, compared to the previous quarter
Finance Secretary Derek Mackay said:
“Scotland’s economy faces continued headwinds, such as the slowdown in the oil and gas sector and weak global demand. Despite these challenges, the foundations of our economy are strong with growth in 2016, unemployment falling and early signs that the situation is improving for North Sea operators.
“This shows the importance of announcements such as the investment by global professional services firm Genpact of plans to create more than 300 new jobs in Glasgow, recent investments in the energy sector and the importance of developing new industries, attracting investment and promoting Scotland overseas, such as through the First Minister’s current visit to the United States.
“Before the EU referendum, the UK Government told us Brexit will make us ‘permanently poorer’. What is now quite clear is the economic reality of the Brexit vote. We have already seen significantly lower consumer confidence in Scotland since the vote last summer. Now we see that feeding through into our growth figures and all of this is before the UK actually leaves the EU.
“It is also noteworthy that although these figures do not include offshore oil and gas production, the downturn continues to impact on the wider economy through the supply chain just as it has in Norway and Canada. We will continue to support the sector by investing in innovation, our £5 million Decommissioning Challenge Fund and the Energy Jobs Taskforce, among other initiatives.
“Scotland enjoys resources few nations can match, including one of the most highly educated workforces in Europe, a long standing reputation for innovation and an internationally-recognised brand. We will continue to do all we can to support growth in the Scottish economy. For example, our £500 million Scottish Growth Scheme to stimulate investment in new and early-stage businesses and investing in our £6 billion infrastructure plan.”
- Consumer confidence in Scotland fell sharply after the Brexit vote. For example, the Scottish Government’s Consumer Sentiment Index turned negative for the first time in 2016 Q3 and remained negative in 2016 Q4. Data is provided in the latest Scottish Government State of the Economy Report. Recent consumer confidence indicators for Scotland have been persistently lower than for the UK as a whole. See for example, GFK Consumer Confidence indicator quoted in the latest Fraser of Allander Economic Commentary